Insights

Transforming the Supply Chain Model

15 Sep 2020, Michael Power

Business Insights, Digital Transformation, Brisbane, Data, Supply chain management

Supply Chain Management

The global pandemic has had a severe impact on supply chains across the globe. The Information Technology industry is unique in that a majority of IT hardware supplies originate from the “world factories” of China. While this has been a successful business model for many businesses and organisations thus far, COVID-19 has forced many organisations to rethink their supply chain due to supply vulnerabilities caused by these supplier disruptions. Observations made from discussions with CIOs during the pandemic include:

  • Most organisations’ vendors were able to continue providing services, though they were subject to delay as countries shut down and lockdowns were imposed across the globe.
  • Some organisations sought to renegotiate or seek more favourable contracts when they fell due.
  • Some parties acknowledged their inability to react and scraped by without support from partners.

Looking ahead, CIOs are mostly in agreement on the most likely future supply chain model:

  • Source and activate alternate sources of supply (if possible) will become integral to a business’ continued survival.
  • Businesses will need to continue to update inventory and planning parameters to adapt to the new norm.
  • Aligning IT systems and IT support to evolving work requirements will be necessary to adapt to the new landscape.
  • Evaluate new digital supply networks including IoT solutions to enable end-to-end visibility, collaboration, agility, and optimisation.
  • Reviewing asset policies e.g. “desktops to transition to laptops” to provide a more agile workforces in case of future disruptions.
  • Updating the Corporate BCP & DRP to reflect any impacts of supply chain disruptions.

Supply chain managment 2

The Digital Supply Chain

While it’s impossible to predict the ultimate cost of the pandemic, businesses should take COVID-19 as an opportunity to learn the costs of under-preparation. Perhaps next time there’s a significant “shock event” like this pandemic, more organisations will be prepared and the damage to supply chains will be much less.

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